E-commerce – Silent Relationships

E-commerce grew 88% faster than general retail sales

U.S. e-commerce sales totaled more than $270 billion in the third quarter of 2023, up almost 8% compared to the same period last year. That sounds like a lot of shopping, but it’s just 15.6% of total retail sales for the quarter. At least 8 out of 10 times we buy some-thing, we choose to push a real shopping cart, not an electronic one.

The American economy is driven by consumer spending. And all retail shopping activity is increasing. Online shopping, though still a collectively small bagful, is growing faster than brick-and-mortar shopping. According to the U.S. Census Bureau, in the third quarter of 2023 e-commerce shopping increased 7.6% from the third quarter of 2022 while total retail sales increased just 2.3% in the same period.

That’s a lot of numbers so early into this story. Just one more. U.S. e-commerce sales have grown 88% faster than general retail sales since September 2022.

You may not embrace online selling, and we’ve talked to many OPE dealers who don’t. But the longer you choose to avoid e-commerce, the more sales you’ll be missing to competitors with online shopping options.

It’s not all about Amazon.com. While the company does control roughly 38% of U.S. e-commerce sales (Walmart is second with less than 10%), Amazon’s share of the pie is not growing. Other retailers are increasing their ecommerce sales, and it’s a large group of retailers each holding small slices.

One of those is Home Depot, which is in the top 10 of ecommerce retailers, up there near Walmart and Target. And since HD is the largest power-equipment retailer in the U.S., its e-commerce activity deserves attention.

In its OPE Market Trends Report for 2023, industry analyst Traqline reports that, as of June 2023, in-store shopping remains the most common sales channel for outdoor power equipment consumers, with 66% of shopping taking place at a brick-and-mortar location. That means nearly one-third of power-equipment shoppers are purchasing online; that’s more than in the general retail number including apparel and consumer electronics. In this story, we look at why people shop online, what some power equipment manufacturers are doing about it, and what dealers should do.

Why people buy online

Sharp readers will notice that we’ve used “shop” and “buy” online haphazardly so far – to make a point. Everyone, and we mean everyone, shops online. Fewer people buy online. (Even if your dealership is not fully equipped for the buying part, your website better make it easy for people to do the shopping part.)

A 2018 Marist Poll found that 56% of Americans prefer shopping in a physical store. However, being able to shop at any time (64%), to find the item easily (62%) and to save time (61%) were all major reasons that could lead to people choosing to shop online.

Note that this poll was from 2018, pre-pandemic. Since then, everyone has learned how easy ecommerce can be. Everyone, meaning both shoppers and retailers. So even though not all are choosing ecommerce yet, the “convenience” factor has surely in-creased for both sides of the commerce equation.

E-commerce: Reasons why

• #1. I can shop anytime.
• #2. It’s more convenient than traveling to a store.
• #3. I have more product choices.
• #4. I can find items at cheaper prices.
• #5. I can read product reviews while I shop.

Are you ready?

“Some customers shop online just to make parts lists, but then they abandon the cart. Then they call a store to confirm that the parts order is correct and they place the order over the phone,” said Taylor Gerber, marketing manager at Johnson Tractor, an equipment dealer with nine locations across Wisconsin and Illinois. “It’s more of a reference point 8 of 10 times for our customer base.”

Surveys we’ve done (and conversations we’ve had) in the last 12 months show that OPE dealers have mixed reactions to e-commerce. “The trends are shifting more to dealers realizing they have to do something here,” said Tony Zane, sales manager for Dealer Spike, a website solutions provider for equipment dealers. “But can a dealer do enough marketing to compete with a Home Depot and its online marketing efforts? Maybe not, but they can have a broader depth and breadth of OPE-specific parts, lawn mower blades, etc., compared to the big-box stores. And they have the expertise.”

“That productive range and expertise gives a mom-and-pop shop the ability to compete with big stores outside of regular work hours,” said Wyatt Dike, Dealer Spike product manager.

But how; how do individual dealerships compete with the online ecommerce power of huge retailers? They start by starting. Stihl has been an aggressive proponent of ecommerce, encouraging its thousands of U.S. dealers to enable online shopping. “We have been working to help dealers establish an online presence for many years,” said Robert Jenson, Stihl’s director of e-commerce. “Online transactions kicked off in 2019, pre-pandemic. We are looking in the last few years to see how we can help dealers accelerate sales online. It’s a growing and important channel.”

Customer journey

E-commerce did not create the idea of a “customer journey,” but digital shopping makes that journey traceable, like little bread crumb trails. “When you think about the customer journey – awareness, consideration, conversion – we need to provide good experiences throughout,” said Jenson. “We look at website heat-mapping tools, learning where customers enter or exit the journey. If we drive the right customer satisfaction, they will vote with their credit card. We’re trying to provide personalized and relevant info across that journey.”

Jenson echoes the “reasons why” data. “The convenience piece is a big part of it, shopping off of store hours,” he said. “Price, too, is important for retail in general and for OPE. But the overall customer experience is key.”

Ignite Attachments launched in Nov. 2022 to target value customers, according to Trisha Pearson, business director for Ignite. “That’s why e-commerce is so valuable to us. Many people research online no matter where they buy, and we want to make that purchase as easy as possible. And we sell both online and in store through our own dealer network. Pearson said that for all Ignite e-commerce sales, “the bill-to is the dealer and the ship-to is the customer, just like they’re selling it off their lot.”

Value is important for Ignite shoppers but convenience is key too, said Pearson. “We are increasingly aware of the amount of research people want to do before shopping. The value prop we have is we can fulfill the same day, and we can provide the expertise. No one needed another bucket manufacturer. The more we can be transparent to customers, the more dealers will want to work with us. We say that e-commerce lets us deliver the right fi t at the right price right now.”

Convenience is king

“Our customers, especially rural lifestyle or hobby farmers,” said Gerber from Johnson Tractor, “have come to expect Amazon-like service in the power equipment industry, which is light years be-hind in terms of offering an ecommerce solution that works as fast.”

“We show dealership salespeople the time-saving opportunities of a manufacturer’s published parts data,” said Tony Zane, sales manager for website builder Dealer Spike. We recommend e-commerce because of that parts lookup. Customers can get on the dealer’s website and easily order parts.” Tony told a story that may be familiar, about buying a part on Ama-zon and receiving the incorrect one. “Amazon is less than trustworthy for getting the right parts and is worse for returns,” he said.

“PartStream” is the Dealer Spike online parts platform. “When you sign up for website services with us,” said Zane, “you get this data if you carry a manufacturer we work with. Customers can see all the data and add to a shopping cart. Dealers can choose whether they want to en-able ‘ship to home’ or ‘ship to store.’ And dealers have complete control over pricing on all these parts. They can change the markup as they desire.”

More than 30 percent of Dealer Spike customers enable some sort of e-commerce. “And 80 percent of those use in-store pickup,” said Andrew Williams of Dealer Spike. And while some OPE dealers we’ve spoken with fear that e-commerce inhibits relationship building, Williams said the opposite is true.

“If a store – OPE or other – enables me to get products easily and conveniently, I will have a relationship with them. E-commerce can enhance relationships by meeting a customer’s expectations. It might be a silent relationship, but it can be a positive one.”

Andrew Williams, Dealer Spike

Dealers are customers too

Exmark learned it had to shift its e-commerce strategy to better serve its dealer customers. “A lot of dealers are concerned about e-commerce taking feet out of their showroom,” said John Cloutier, Exmark’s senior marketing manager with innovation and strategy. “We unplugged our direct selling model. Online trans-actions are between the customer and their local dealer. When the customer enters their credit card info, they’re basically put-ting money directly into the dealer’s account. Full profitability, whether the customer walks into store or buys online.”

“One of our biggest challenges,” said Gerber from Johnson Tractor, “is every manufacturer offering ecommerce wants to offer its own solution. A dealer may end up having four or five different e-commerce sites based on the number of lines they offer. Until there is an integrated solution, it will continue to lead to a somewhat frustrating customer experience. The obvious option would be to create our own, but the time and resources it takes to create something like that is astronomical.”

“Kubota has had its e-commerce system in implementation for about 18 months,” said Don Lowe, executive director, sales at Kubota. “We wanted to make sure we do not take business from dealers. All e-commerce business goes right to the DBS. Customers see the dealer’s own pricing. Some customers just look at the pricing online, and then go visit the dealer.”

Lowe admits that Kubota dealers have been slow to accept the manufacturer’s Shop.Kubotausa.com system. “Dealers want to make sure we are not going direct to consumer. About 35 percent of our dealers are on board and live. Many more dealers are waiting, but it takes time to complete the integration. Johnson Tractor is currently setting up its Kubota e-commerce platform. “We needed to get our feet wet with our CNH e-commerce before we added another layer of complexity,” said Gerber.

What’s next for e-commerce?

“I look at what we’re doing as an extension of the dealer’s showroom,” said Cloutier from Exmark. “The thing about e-commerce, it can also boost productivity for landscape contractors who can order online and not spend time waiting at a parts counter.” Exmark gives dealers the option to sell online. Dealers setup a payment gateway, just like in store, enabling them to take credit card payments. Cloutier said it costs about $20 month. “And the rest is hands off. The only other role they have is if there is a return initiated online,” he said. He said about one quarter of the company’s 1,500 dealers take part.

“We are looking to the future of being an omni-channel provider of all power equipment products because customers are looking to buy that way. Who’s to say that won’t soon include whole goods. We want to do ecommerce in a manner that supports our dealers and distributors.”

John Cloutier, Exmark

Exmark was not the only manufacturer we spoke with that talked about helping dealers become “omni-channel” businesses. “Kubota dealers sell parts online, yes,” said Don Lowe. “Implements will be the next move for us. But we’re going to take our time before we get to vehicles. We want to make sure our dealers are comfortable with this.”

As one of the early drivers of e-commerce in power equipment, Stihl continues to evolve its online tools. “We are trying to provide new solutions for dealers so they don’t have to hire people to increase sales,” said Jenson from Stihl. “Dealers can go in and adjust what products are available, and they can discuss with local territory managers, who have the ability to see ‘views’ on certain products. This data-driven approach can help them sell more in store and online. It’s all pointed at getting people to dealers.”

Kubota’s “My Garage” tool is a good example of where manufacturers might be going with e-commerce. Customers register their vehicles on this platform, which helps them select the right parts, and track service and warranty work. “We want every customer who purchases a Kubota tractor to sign up for My Garage,” said Lowe. “I bought a Kia recently, and the dealer immediately had me sign up for their version.” The data collected helps Kubota learn about customer use (remember “digital exhaust” from our “Digital Transformation” feature?). “As this matures, we can learn a lot about customers and fleet use. Plus, we’re going to look at buying history, and parts movement. We’re not too detailed yet on that.”

Last word

I’ll give power-equipment dealers the last word here. “We have faced a few headwinds with the initial launch of e-commerce for Case New Holland parts,” said Gerber of Johnson Tractor. “That caused some reluctance from our customers. The bugs have been worked out and the program is now more user friendly and easier to manage from our side. We welcome technology that makes our lives easier even with the previously mentioned headwinds. We will embrace e-commerce as it comes.”